Business Unity South Africa (BUSA) has initiated legal proceedings against the employment equity sector targets, which came into effect on 1 September.
This move marks the latest in a series of legal challenges to the regulations under the Employment Equity Amendment Act (EEAA), which became law in January this year. The targets, gazetted in April, aim to ensure that workplaces more reflect the racial, gender, and disability demographics of South Africa by setting numerical goals for designated groups – black people, women, and individuals with disabilities – across 18 economic sectors.
The targets apply to companies employing more than 50 people, requiring them to develop five-year plans to make their workforces demographically representative. Designated employers must align their employment equity plans with these targets or face potential fines, compliance orders, and exclusion from doing business with the state.
BUSA has applied to the High Court to review and set aside these numerical targets, arguing they are irrational and arbitrary. The Minister of Employment and Labour and the Commission for Employment Equity have been cited as respondents.
BUSA said it is not opposing the EEAA or the principle of sectoral numerical targets under section 15A of the Act. Instead, the organisation contends the targets are fatally flawed both substantively and procedurally, risking the undermining of the goal of an inclusive, transformed economy.
The EEAA empowers the Minister of Employment and Labour to identify national economic sectors and establish numerical targets only after consulting relevant stakeholders. BUSA asserts the minister jumped the gun by consulting on the targets before the amendments were signed into law. It said the Act envisages a multi-step process before the minister may set numerical targets for a sector. These steps include identifying a national economic sector by notice and issuing regulations prescribing the criteria to be taken into account in determining numerical targets.
BUSA said its decision follows years of engagement with government, labour, and other social partners to advance workplace equity and transformation.
“BUSA has consistently engaged with the Department of Employment and Labour (DEL) in good faith. These engagements included formal meetings, data submissions, and a detailed presentation to the minister raising urgent concerns with the consultation and methodology process.”
Khulekani Mathe, BUSA’s chief executive, said in statement this week: “What took place was not meaningful consultation; it was a presentation. As social partners, we cannot allow performative engagement to substitute for genuine collaboration.”
Main areas of concern
Key issues raised by BUSA and left unresolved include the limited consultation time, where employers were given less than a week to respond, with most receiving draft targets the night before meetings that lasted only an hour.
There was also insufficient information provided regarding the methodology used in reaching the targets; for instance, the EE disability target was raised to 3% without the DEL providing sufficient supporting data or adequately explaining how this figure was reached, despite acknowledging the lack of disability statistics.
Additionally, BUSA points to insufficient sectoral analysis, with limited assessment conducted to determine whether targets were achievable across industry-specific realities. The targets are not aligned with broad-based black economic empowerment sector codes, creating regulatory confusion.
It also says the DEL’s refusal to differentiate among subsectors ignores operational, geographic, and structural diversity, resulting in one-size-fits-all targets.
“Poorly developed targets risk damaging vital sectors of the economy. If targets are unrealistic or not based on the skills available in each sector, companies may find themselves unable to comply. This creates uncertainty and weakens the integrity of the regulatory process, ultimately undermining the transformation and inclusion that the Employment Equity Act is meant to achieve,” Mathe said.
“The need for transformation is urgent, but urgency must not become recklessness,” he said. “We’re acting now to protect the credibility of equity policy. Unworkable targets do not advance transformation. They deepen frustration and erode trust in public policy.”
BUSA emphasised that its legal challenge is not aimed at opposing transformation or undermining the EEAA. The concern lies with the manner in which these targets have been developed and imposed.
BUSA said it is committed to working with the government, labour, and other partners towards a framework for transformation that is lawful, transparent, and evidence-based; grounded in robust data and sector-specific realities; and achievable in practice, ensuring sustainability of transformation over time.
Backing from SEIFSA
Support for BUSA’s challenge has come from within its membership, including the Steel and Engineering Industries Federation of Southern Africa (SEIFSA).
SEIFSA has confirmed its backing for the legal proceedings, noting it has no objection in principle to the provisions of the Employment Equity Act in pursuit of meaningful workplace transformation.
However, SEIFSA said it is concerned about the numerous “irrational substantive and procedural irregularities” in formulating the final sector targets, despite ongoing consultations with senior DEL officials and between BUSA and the minister.
“The nature, tone, and content of consultations between business and government fell short of what would be considered good-faith consultations,” said Lucio Trentini, the chief executive of SEIFSA.
Furthermore, the categorisation of manufacturing in the EEAA as an all-encompassing category that includes all forms of manufacturing across the board is wrong, Trentini said. Manufacturing entails vastly different economic subsectors and activities, all differing significantly in size, complexity of operations, demographics, and input costs. Even within the metals and engineering sector, there is no uniformity between the 12 subsectors that make up the sector.
Trentini said the minister has the power to identify subsectors but failed to do so.
Additionally, SEIFSA is concerned about the apparent lack of empirical and/or statistical data and the methodology used in arriving at the sector targets. Consultations around these matters need to go beyond being a mere tick-box exercise.
“Genuine engagement marked by transparency, sector-specific insights and meaningful feedback, all of which have been absent in the lead-up to the promulgation of the Act, are key ingredients of any good-faith consultation engagement,” he said.
Trentini emphasised that regardless of the outcome in this and other legal challenges, South Africa will not reach its full economic potential if transformation is halted. “The slow pace of transformation in the country, including in the metals and engineering sector, is of great concern,” he said.
Other legal challenges
The National Employers’ Association of SA (NEASA) and Sakeliga have launched their own challenges to the EEAA.
Last month, the High Court in Pretoria dismissed their application to interdict or suspend the implementation of the numerical targets, with Judge Graham Moshoana ruling that the minister had set numerical targets rather than goals, and that the court was in no position to determine whether the numerical targets set by the minister were lawful or not.
NEASA and Sakeliga plan to appeal this judgment to both the Constitutional Court and the Supreme Court of Appeal.
Read: High Court dismisses bid to halt race and gender targets
NEASA and Sakeliga accuse the DEL of imposing rigid racial and gender quotas that ignore operational realities or regional labour market conditions. They argue the regulations infringe on constitutional rights to freedom of association and trade, and that the minister’s powers under the EEAA represent an overreach of executive authority.
They seek a full reversal of the regulations and legal protection for employers facing penalties under the amended framework.
The Democratic Alliance has launched a separate challenge in the High Court, arguing that the targets violate the rights to equality and freedom of trade. The party maintains the targets function as quotas rather than flexible benchmarks and that the minister’s powers enable the imposition of national demographic ratios without regard to firm-level or regional context.
In BUSA’s case, the legal challenge is grounded in section 195 of the Constitution, which requires public administration to be transparent, accountable, and responsive, as well as in the Promotion of Administrative Justice Act, which prohibits irrational or procedurally unfair administrative action.
The DEL is expected to file its responding papers in the coming weeks, with a hearing date yet to be confirmed.
